The Impact of Federal Regulations on Franchised Automobile Dealers

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At the request of the National Automobile Dealers Association (NADA), the Center for Automotive Research (CAR) examined the economic costs of U.S. light vehicle dealerships’ federal regulatory compliance. This study examined only the costs incurred by U.S. light vehicle dealerships to comply with a group of roughly 60 federal regulations, and did not include any product regulations (such as fuel economy or emissions), nor any state or local mandates.

According CAR’s analysis, the average dealership incurred $182,754 annually in federal regulatory compliance costs for regulations pertaining to employment, business operations, vehicle financing, sales, marketing, and vehicle repair and maintenance in 2012. These regulatory costs comprised 21.7 percent of the average dealership’s 2012 before-tax net profits, or nearly $2,400 per dealership employee. CAR estimates that every $1 increase in a dealership’s regulatory compliance costs results in $3.28 in lost output in the U.S. economy and a net loss to the U.S. Treasury of $0.44.